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Facebook’s UK Arm Paid Less Than £5,000 Corporation Tax Last Year

Written by: Keith Tully

Reviewed: Monday 12th October, 2015

The British arm of the global social media giant Facebook paid less than £5,000 in corporation tax last year, according to its latest Companies House filing.

Despite being part of a global operation that generated profits worth £462 million in the fourth quarter of 2014 alone, Facebook’s UK business apparently made a pre-tax loss last year of £28.5 million.

Its Companies House filings show that Facebook UK paid its 362 Britain-based staff members a total of £35.4 million in share bonuses last year but only £4,327 in corporation taxes.

The average amount paid annually as income taxes and National Insurance by people in work throughout the UK amounts to more than £5,000.

On a global scale, Facebook makes much of its profits through advertising revenues, with the company able to report a near doubling of overall profits and earnings worth some $2.9 billion for the full year in 2014.

There has been a degree of outrage expressed about the strikingly low corporation tax figure that Facebook paid in the UK last year with a variety of well-known global companies having been obliged to fend off criticism about their British tax affairs in recent years.

Typically, these companies, which have included Google, Amazon and Starbucks, have made clear their position that they simply pay all the taxes they are obliged to by law in each country in which they operate.

A spokesperson for Facebook said: “We are compliant with UK tax law, and in fact in all countries where we have operations and offices. We continue to grow our business activities in the UK.” 

John O’Connell from the Taxpayers’ Alliance said: “Taxpayers will be justifiably confused and angry about this tax bill. But Facebook is right to say that it is complying with UK law, which shows that the problem lies with our complex tax code, and that is what politicians should address as a matter of urgency.”

“We have to ensure our taxes are simple to eliminate loopholes, and that taxes are low to increase our competitiveness, so that companies choose to base themselves here,” he said.

Facebook recently signed up to lease a large area of office space in central London with a view to opening a new headquarters at the site near Tottenham Court Road.

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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